The Startup Way: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth

by Eric Ries

In Lean Startup terms, we understand cycle time as build-measure-learn, which means that sometimes nontechnical parts of the cycle can be collapsed through business model changes. One product team I worked with kept running into a problem. After their product was designed and built, it took a year or more for customers to be given the chance to buy the new model. Why? Because distributors had to purchase the new product and revamp their showrooms in order to display it. Many distributors found this expensive and had little incentive to do it frequently. In markets with few distributors, there was little pressure on distributors to have the latest models on display. Nobody on either side of the divide found this arrangement strange—it was simply how the industry had always operated. And in terms of the long-term profitability of each product, it probably made little difference. Still, from a learning and cycle-time point of view, this setup is quite expensive. Compared to the cost of developing a new product, the cost of helping the distributor is quite modest. Why not move showroom costs onto our balance sheet?